California Lawsuit – Short Insurance News Update
California homeowners are turning to the courts in a fight over what they say is more than just insurance policies gone awry. Two separate lawsuits accuse major insurers like State Farm, Farmers, and others of colluding to push policyholders onto California’s FAIR Plan, a last-resort insurance pool that delivers bare-bones coverage at premium prices.
Here’s the crux of the argument. The lawsuits, filed in Los Angeles County, allege that insurers deliberately scaled back coverage and dropped customers in wildfire-prone areas. The FAIR Plan, designed to be a safety net for those struggling to secure policies from private insurers, has seen its policyholder count balloon from roughly 200,000 in 2020 to over 560,000 in 2025. Homeowners claim they were left with no real choice but to accept limited, high-cost FAIR Plan policies.
Take the case of families from Malibu and Altadena, where wildfires devastated homes earlier this year, and FAIR Plan payouts allegedly fell miles short of the real recovery costs. Homeowners like Michael Bidart, an attorney representing the plaintiffs, argue the system benefits insurers. “They reap high premiums while offloading wildfire risks,” he said.
But the insurers’ side of the story tells a different tale. Industry representatives argue these lawsuits overlook California’s “outdated” regulations. Rex Frazier, president of the Personal Insurance Federation of California, claims rising construction costs and climate change require swift regulatory updates. Frazier also disputes any profit motive behind pushing homeowners to the FAIR Plan, pointing out that member insurers often absorb significant losses tied to the plan. Earlier this year, they were collectively hit with a $1 billion assessment to cover wildfire claims.
Meanwhile, consumers across the state are caught in the fallout, facing soaring premiums or, worse, losing coverage altogether. A FAIR Plan policy can cost two to three times more than traditional policies, leaving families stretched thin. Add in the emotional toll of rebuilding after disasters, and it’s clear this isn’t just a legal debate. For many homeowners, the stakes are quite literally the ability to stay in the homes they’ve worked so hard to create.
The lawsuits include major insurance companies such as State Farm, Farmers Insurance, Allstate, Liberty Mutual, and CSAA, among others. These companies are accused of colluding to push homeowners onto California’s FAIR Plan by reducing coverage and dropping policies in high-risk areas.